I wish I could tell you that we had an incredibly productive day in Sacramento, educating numerous state senators personally about affiliate marketing.  They all understood what we do and they all agree that adding language to tax bills that make affiliate partners consistute nexus for out-of-state merchants is not going to make the state any money and is a bad idea.

I wish I could tell you that.

Instead, I report back after going to Sacramento last Wednesday, May 12th, with some less-than-uplifting realities about our state government here in California.  Late last week, the Performance Marketing Association learned that there was a meeting on the 13th in CA senate subcommittee 5 to discuss adding affiliate nexus language to one of their pending budget bills.  It’s not yet back, officially, in the form of a bill in the CA senate or assembly, but just knowing that they’re discussing it is enough for us to try to go educate some lawmakers on what affiliate marketing is, why affiliates shouldn’t create tax nexus for merchants, and why the state won’t actually make the $1.7 million they think they will.

I was asked to join Lisa Picarille and up we went to the capitol, no appointments made due to the last-minute nature of the trip, with high hopes of talking to the three state senators sitting on the subcommittee and laying some education on them.  We knew that other affiliates and fighters in this advertising tax battle had previously met with Senator Denise Moreno Ducheny, the chair of the subcommittee and the state Budget and Finance committee, and had not had good luck in getting through to her, so we targeted her office first.  She was booked solid in meetings, but we were given a time to check back to see if one of her staff members had a small window of time to talk.

So we went on to the office of Senator Robert Dutton, who we’d heard was on our side.  We spoke with a nice staffer in his office who was very well versed on the affiliate nexus issue and assured us that Sen. Dutton opposed the language and that most the Republicans were probably on our side as well.  It was very nice to meet with someone who actually knew what we were talking about and understood the issue.  In the two previous times I’ve gone to Sacramento, we had uphill battles trying to explain affiliate marketing to blank-faced staffers, so his knowledge about the issue definitely allowed us to cut right to the chase.  He suggested some other people we talk to, some influential to the budget committee and subcommittee, and some already on our side that might be able to help in other ways.

Lisa and I then set out for Senator Alex Padilla’s office as it wasn’t yet time to check back in to see if Sen. Ducheny’s staff could talk to us.  We were unable to speak to the people Sen. Dutton’s office had recommended, but we spoke to the legislative director who was very interested in learning more and very interactive.  He asked us a lot of questions to better understand the issue, and was very interested in the information about Rhode Island not realizing the projected revenue from their version of the advertising tax and their consideration of repeal.  Rhode Island actually has a bill in play now, H 7071, set to repeal the “Amazon Tax” but it looks to be stalled and waiting for a proper hearing.  So as not to lose time, we quickly had the information emailed to him as we went about to other offices.

That’s kind of where the magic ended.  I have to say, I was feeling okay at that point that people were hearing us out.  I didn’t feel that any overly appreciated us being there as private citizens just wanting to spread some education and counter some mis-information being spread by the opposition, but they seemed willing to listen and comprehend.  We went to the budget committee office, and they weren’t that helpful.  The person we were looking for wasn’t there, and the people who were there told us we were pretty much crazy to attempt to see anyone without an appointment at this time of year.  What happened to PUBLIC SERVANTS making themselves available to the PUBLIC, hmm?  This served as a harsh reality (to me anyway) that our system is generally broken. We took a break, and after refreshing ourselves with some lunch, we headed back to Sen. Ducheny’s office to check in.

We arrived earlier than the time we were asked to come back, but since we had no one else to see it was worth a shot.  We were ushered into the office of a staffer who was, unarguably, the worst attitude and most combative of all the people we talked to that day.  She made me very glad I do not live in Sen. Ducheny’s district (40th District).  The staffer kept attacking affiliates for working with out-of-state retailers in the first place.  I tried to explain to her that, California being just one of 50 states, the “Buy Californian” attitude wasn’t a viable business option, but I got the distinct impression that she didn’t care.  She checked her cell phone multiple times while Lisa and I were trying to pleasantly and professional counter her unprofessional combative questions, which is just plain rude no matter what the situation is.  She kept asking us what we proposed the state do instead to fix the budget.  I wanted to tell her that it’s THEIR job to figure that out, not ours, but instead Lisa suggested some alternatives and tried to focus on the argument that the retailers will just drop CA affiliates, and the state won’t make this money they think they’re going to make.

That being our last meeting of the day, it did leave a bad taste in my mouth about Sacramento and state politics and government in general.  I hope I can be of service throughout this fight until we’ve successfully killed the advertising tax, in all forms, here in California.  Until then… anyone have a million bucks we can hire a full time lobbyist with?

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Many in the affiliate marketing industry are aware of what happened last summer with the New York State affiliate tax, also known as the Amazon Tax.  The state laws were amended to include affiliates as agents of the merchant, requiring the merchant to charge sales tax for purchases made to New York residents.  As a result, many merchants took the easy way out and decided to drop all NY state affiliates from their programs.  This resulted in an immense loss of revenue for several affiliates.

Unfortunately, several other states are following suit, most notably California, Hawaii, Minnesota, Tennessee, and Connecticut.  The most pressing of which is California, looking to enact the new bill ASAP with a hearing scheduled for April 13th in Sacramento.

In layman’s terms, AB 178 changes the definition of a “retailer engaging in business in this state” to include any retailer that works with affiliates in this state where the gross receipts or sales prices is over $10,000 per year.  Feel free to read the entire bill online here.

Being a California resident myself, I can tell you that this will have a huge impact on the affiliate marketing industry.  One of the major affiliate networks, Commission Junction, is located in Santa Barabara.  Several super affiliates are also based in California.  As well, Amazon, one of the largest affiliate merchant programs out there, has already testified that they will drop all Hawaii affiliates if Hawaii’s legislation passes, so that can’t be good news for California or the other states.

This bill is short sighted and ill conceived, and we need the help of everyone in the affiliate marketing industry to fight it.  A legislative day has been planned for next Tuesday, March 31st, where several of us are going to Sacramento to speak with legislators and their staff about the ill effects this bill will have.  If you are interested in also participating, please feel free to email me at trisha [at] newedgemedia.com and I will gladly pass the information to the organizers.

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While you were busy finding stolen loot in a speaker box, Travis Gosa, here’s what was happening in business this week.

• Shoemoney spews more vitriol at Shawn Collins.
• Instead of fixing track, Twitter bought search service Summize.  At least it’s been fairly stable lately.
• Gary Vaynerchuck filmed episode 500 of Wine Library TV live from San Francisco on Monday.  Good show; sorry I couldn’t be there.
• There are apparently wheels turning in NY to repeal the affiliate tax.  Linda Buquet has been all over it.

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After running to the bank to take out money for bridge toll, heading west towards the big scary city, and rifling through my car & wallet for change for the meter while praying that the meter maids were taking a day off, I finally made it into the June Bay Area Affiliate Managers Coalition meeting, this time hosted graciously by Real Networks. As an aside, I like their building… older, brick, kinda funky and unique but still professional.

Last time I did a video because it was my first venture over there and I had a lot to say. I was happy to receive some kudos on it from BAAMC organizer Michael Brucker. We had some special guests at this meeting… Lisa Picarille from Revenue Magazine came over and Brook Schaaf from Schaaf Consulting flew up from LA just for this. Aren’t we special?

I was going to write a good long post about it, but it seems Lisa in her diligence as a journalist has beat me to it! So here’s her take at RevenueToday.com. She mentions a few other special guests that attended the meeting, but I didn’t see them (and yes… I’d recognize them!) so maybe they were on the phone listening in… I did arrive a touch late.

So, some notes not mentioned from my take. It was nice to finally meet Lisa in person, especially after subbing for her that once on Affiliate Thing. Very gracious…although I have to tell you, it’s totally surreal sitting in a room looking at a person speak that you listen to every week without an image in your head. Strange lol. She was surprised that I’d had time to come to the meeting given how busy I usually am, which prompted me to mentally review how busy I must sound on Twitter and this here blog without actually intending it!

Also said hi to Karen Garcia of GTO Management who came to the meeting directly from SFO – what a trooper! And had a nice conversation with a fellow affiliate manager who’s used PsPrint a lot in his former life of being an event promoter and loves us! Always great to hear!

Brook talked about the up-and-coming Performance Marketing Alliance (PMA), which got a lot of people in the room revved up. We also talked at length about the NY affiliate tax and how we wish the networks would get more involved. What’s definitely clear is that there’s a lot of confusion on how we’re effected as managers and the programs we represent. A vague law will only vaguely be enforced, NY!

Incidentally as a side note, the PMA launched their blog this week and today Rebecca Madigan posted their plan of attack.

We also talked a bit about some miscellaneous things like video widgets and the like. Since most of us in the room have our programs through Commission Junction, we collectively wish they’d buck up on offering some more interesting and innovative creative options, like widgets. One opinion was that video is pretty good for buzz, but general consumers never think to click on the video so it doesn’t convert as a sales tool. I think the jury is still out on video as a traceable seller like a banner ad.

That’s the meat & potatoes of it, really. Our next meeting should be sometime in August. And I’m sure you’ll be happy to know that I managed to escape parking-ticket free!

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June is here, which means the “Amazon Tax” law, as it’s been dubbed, is now in effect. Merchants with affiliates residing in New York state will now have to charge tax on orders of customers in New York. In short, the state of NY has decided that affiliates constitute nexus, i.e. a term used to describe whether a business has sufficient presence or activity in a state or other taxing jurisdiction to become subject to the tax(es) of the state or jurisdiction. So now in NY state online retailers with affiliates residing in that state have to charge tax, regardless of where their corporate headquarters actually are. Some good links that explain this better than I ever could are to TechCrunch’s May 14th post and Scott Jangro’s May 22nd podcast.

So many of the larger online merchants with a large number of affiliates in NY have made the decision to drop their affiliates who reside in NY. The great folks over at ABestWeb.com Affiliate Forums have kept a running list of the merchants who’ve dissed their NY affiliates. So if you’re from NY, be aware that these merchants may not approve your application if you apply in the near future.

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